Citigroup announced that it will suspend foreclosures for the next 30 days in order to work on long-term alternatives to foreclosure. This will be happy news to an estimated 4,000 borrowers.
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Christmas at Merrick Park
Beautiful Christmas Tree at Merrick Park.
Whereas Miami’s residential real estate market is seeing relatively steady increases in sales over last year, our commercial market’s third quarter sales plunged 70% compared to 2008. The price per square foot has decreased in the industrial sector the most, down 23%, followed by multifamily 14%, office 12% and retail 9%. It is interesting to note that the price per square foot decrease does not necessarily correlate with the number of distressed properties in each of these sectors, but rather with their actual use. It makes sense that if industries are closing that sector would have high vacancies (therefore lower pricing) and that the multifamily, in competing with the over supply of residential real estate, would also see a decrease in their pricing.
This huge decrease in commercial sales and pricing is not unexpected, as the commercial real estate sector typically lags behind the residential real estate market.
Whereas Miami’s residential real estate market is seeing relatively steady increases in sales over last year, our commercial market’s third quarter sales plunged 70% compared to 2008. The price per square foot has decreased in the industrial sector the most, down 23%, followed by multifamily 14%, office 12% and retail 9%. It is interesting to note that the price per square foot decrease does not necessarily correlate with the number of distressed properties in each of these sectors, but rather with their actual use. It makes sense that if industries are closing that sector would have high vacancies (therefore lower pricing) and that the multifamily, in competing with the over supply of residential real estate, would also see a decrease in their pricing.
This huge decrease in commercial sales and pricing is not unexpected, as the commercial real estate sector typically lags behind the residential real estate market.
Miami ranked third in the nation in the number of distressed commercial properties. Miami has $7.6 billion worth of properties that can be considered distressed, according to Real Capital Analytics, a real estate research firm. Las Vegas was the worst off with $17.7 billion and Manhattan was third with $12.3 billion. Since the total nationwide is estimated to be $180 billion of distressed properties there is plenty of pain in other states. It makes sense that the sectors of commercial real estate hardest hit are the retail and hotel sectors, followed by apartment buildings and finally, the industrial sector, which wasn’t as heavily leveraged as the other sectors.
| RCA’s Market Stats for Miami, FL Past 6 months | Reported closed/in contract |
|---|---|
| Volume ($mil.) | $872.2 |
| No. of props sold | 75 |
| Avg. price in mil. | $11.6 |
At the end of November, the United States Treasury Department released new rules attempting to encourage banks to speed up short sales. The rules create a uniform process and documents that all banks must use as well as provide cash incentives to banks willing to participate. The new rules are starting to work…I actually had a previously unapproved short sale close faster and with less problems than a regular sale that went under contract at around the same time.
This is great news for buyers and sellers as it will help us move through the inventory levels that much faster. In order to qualify, a seller must:
- use the home as his/her primary residence
- have taken the loan out prior to January 1, 2009
- must be delinquent on mortgage or likely to default on it
- have a loan that is less than $729,750
- have a monthly mortgage payment that is more than 31% of before-tax income
I just came from a closing that almost didn’t happen because of the strict lending requirements lenders have. Mind you, the Buyer has been under contract on a regular sale for over a month and was putting 40% down. Last night the bank decided it needed more information on the source of his original $5,000 deposit, given back in early October. When he provided his bank statement showing the $5,000, the latest bank statement also showed a significant deposit, a gift from his sister to help with the down payment. This initiated a request from the lender for a letter from the sister saying it was a gift. He got the letter, but this morning they wanted a copy of the sister’s account where the money came from. She forwarded the statement showing the debit being made to her account. Unfortunately for all parties involved, the sister is married and doesn’t share her husband’s last name, which lead to another request for information. We finally closed a little before 9:00 p.m.
I have no problem with lenders tightening up their lending requirements and wanting to track the money. I do have an issue with them doing so the day before the closing, jeopardizing the transaction, and stressing out all parties, who are usually stressed out enough on the day of a closing.
Moral of the story?
- Create a paper trail of where all the money you are using for the closing is coming from and provide it to your lender or mortgage broker at least several days before the closing.
- If you are getting money from a family member, get a gift letter to go along with it. The letter should be specific as to where the funds are coming from and include a bank statement showing the funds.
- Make sure the name(s )of the accounts match the name(s) in the gift letter.
- If you are running short on time, sign an addendum for a one-two day extension for the closing and make sure all parties to the original contract sign it before the end of the contracted closing date so that you are still in contract.
- Be patient. Lenders are backlogged with new buyers and new regulations.
This was today’s weather report for the Midwest. While they were shoveling snow and trying to stay warm, I was planting more tomatoes, cleaning my pool, and getting surf updates from my son, who was surfing at Sebastian Inlet. Want to get away for the winter? Check out these rentals at Deering Bay.
Home loan rates increased by .125% last week, in reaction to good economic news. As interest rates increase your purchasing power decreases, so why wait for interest rates to go up further? They are still at historically low rates.
Miami Beach’s North Shore District boundaries are 73 street to the south, 87 street to the north, the Atlantic Ocean, and Crespi Boulevard to the west. This funky area of Miami Beach has long been in the shadows of South Beach and did not enjoy much improvement during the building boom. That is actually good news because it means many of the area’s Miami Modern, or MiMo, buildings were saved from the wrecking ball.
Now that North Shore is on the National Register of Historic Places, city officials hope that interest in the area will increase and that the MiMo buildings will be rehabilitated and restored.
What is your favorite MiMo building in Miami Beach?